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SAP Announces 1Q Results

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SAP AG announced its preliminary financial results for the first quarter ended March 31, 2005.

Software revenues were euro 434 million for the first quarter ended March 31, 2005, representing an increase of 17% compared to the first quarter ended March 31, 2004. At constant currencies, software revenues increased 20% year-over-year.

The strong growth in software revenues, which in the first quarter of 2005 were $563 million on a quarter-end U.S. dollar exchange rate basis, produced another quarter in which SAP continued to gain worldwide share against its peer group (defined as SAP and the three companies mentioned in footnote 2). On a rolling four quarter basis, the Company’s worldwide share against its peer group based on software revenues was 58% at the end of the first quarter of 2005 compared to 55% at the end of the fourth quarter of 2004 and 54% at the end of the first quarter of 2004.

Software revenues in the U.S. increased 27% to euro 131 million in the first quarter of 2005. At constant currencies, software revenues in the U.S. increased 35% year-over-year.

The Company performed strongly in all regions with the U.S. driving much of the growth. On a rolling four quarter basis, the Company’s U.S. share against its peer group (defined as SAP and the three companies mentioned in footnote 3) based on software revenues was 41% at the end of the first quarter of 2005, representing an increase of three percentage points from 38% at the end of the fourth quarter of 2004 and an increase of seven percentage points from 34% at the end of the first quarter of 2004. Based on this data, SAP extended its position as the largest business application software company in the U.S.

Total revenues for the first quarter of 2005 were euro 1.7 billion, which was an increase of 11% compared to the same period in 2004. At constant currencies, total revenues increased 13% for the first quarter of 2005.

Operating income for the first quarter of 2005 was euro 374 million, which was an increase of 12% compared to the first quarter of 2004. Pro forma operating income was euro 381 million for the year, representing an increase of 15% compared to the same period in 2004.

The operating margin for the quarter ended March 31, 2005 was 21.6% (2004: 21.4%). The pro forma operating margin for the first quarter of 2005 was 22.0%, which represented an increase of around 1 percentage point compared to the first quarter of 2004.

Net income for the first quarter of 2005 was euro 254 million, or euro 0.82 per share, representing an increase of 11% compared to 2004. Pro forma net income was euro 259 million , or pro forma euro 0.84 earnings per share, representing an increase of 13% compared to 2004.

Operating cash flow was euro 875 million, which was an increase of 2% compared to 2004. Free cash flow of euro 832 million declined to 48% of total revenues (2004: 53%) due to increased investments. At March 31, 2005, the Company had euro 4.0 billion in liquid assets.

“We are pleased to report another strong quarter for SAP,” said Henning Kagermann, CEO of SAP. “The continued strength of SAP’s results is just another example of how far we have distanced ourselves from other software companies, and the gap continues to widen. Our winning position in the industry has been demonstrated by continually out performing our competitors and delivering double-digit growth rates in software revenues and quarter to quarter share gains.”

Mr. Kagermann continued, “Our strength is attributable to keeping a strong focus on driving innovation, building and maintaining a robust, complete and integrated product portfolio and continuing to meet the needs and demands of our customers with a clear and concise product roadmap for the future of their software investments. Our strength in innovation is already delivering results with SAP NetWeaver and mySAP ERP, the first ERP solution enabled for a services-oriented architecture, and innovation will also help drive growth into the next decade with our Enterprise Services Architecture powered by SAP NetWeaver.”

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SAP Announces 1Q Results
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